Thursday, July 21, 2005

See the first posting in this series for citation of the publication, and translated text of the Hayderabad fatwa. In this posting, I include Rashid Rida's response. I am translating his response in full, due primarily to his implicit criticism of "looking at the Qur'an and Sunnah through the lens of jurisprudence" -- something that (and those are not Rida's words, but clearly his import) distorts our readings of revealted texts by the misconceptions of previous jurists. Also, if you find the posting too long, make sure not to miss the quotation from Muhammad Abduh at the end.

Muhammad Rashid Rida said: I testify that this fatwa message on the topic of riba is a valuable one, and that its author, at once issuing a fatwa and soliciting one, has done a very good job researching the topic within the Hanafi school. Indeed, based on this research, he is qualified to be considered a Mujtahid (مجتهد, jurist researcher) or selector of opinions within his [Hanafi] school (مرجح في المذهب), though not sufficiently advanced to issue opinions directly from Qur'an and Sunnah, despite his clear scholarship in exegesis and Prophetic tradition scholarship.

In what follows, I shall explain my opinion on the four main questions addressed in the fatwa that he has sent to scholars in other countries seeking their opinions. Then, I shall turn to our own research, based on what Allah has taught us in Islamic jurisprudence, without restriction ot any school following any of the great scholars.

We shall do so since this issue [of riba] is one on which jurists of the various schools have differed in opinion, and Allah (SWT) ordered [Al-Nisaa': 59] "If you differ in opinion over any subject, refer to Allah and his messenger if you have faith in Allah and the final day; that is best for you, and best in the final analysis".

In this regard, our brother the Indian Hanafi jurist has attempted to do the same thing. However, he looked at the proofs in Qur'an and Sunnah through the lens of jurisprudence, which has been hardwired in his character and dominated his talents. So, I pray in earnest to Allah (SWT) that he will guide me to the correct answer, and endow me with wisdom and decisive language.

The first fatwa

He [the Hayderabad jurist] said: The Riba mentioned (in the verse of Al-Baqara) is deemed by Hanafis and other major scholars to be mentioned abstractly, to the point where one may say that a consensus has emerged on this topic, and its detailed meaning is deemed by the majority of jurists to be explained in the Traditions narrated by `Ubadah and others.

I [Rashid Rida] say: He is correct in stating that the Hanafis consider the riba mentioned in the Qur'an to be an abstract concept. However, he is incorrect to claim that there is a consensus on that view. Moreover, his statement that the Hadith of `Ubadah and others "wheat for wheat..." is the explanation of the verse is not necessarily accepted by all. In this regard, the first thing that comes to mind is that the use of the letters Alif and Lam in "Al-Riba" implies reference to what is familiar; and what was familiar to those addressed by the Qur'an at its time of revelation was two things:

First: Riba al-Jahiliyyah (pre-Islamic riba), which was dropped and invalidated by the Prophet (pbuh), as he dropped and invalidated remaining blood-revenge claims of pre-Islamic times. This was labeled the external custom.

Second: The verse [3:130] "Oh people of faith, do not devour riba doubled and multiplied" is unanimously accepted to have been revealed prior to the verses of riba in Al-Baqara, and the verse [2:281] "and be wary of a day on which you are returned to Allah" were the last revealed verses of teh Qur'an, and that `Umar (mAbpwh) said that the Prophet (pbuh) died without having explained those verses [of riba]. In this regard, `Umar -- who is a narrator of Hadith, and one who acted upon Hadith, as established in books of Sunnah -- would not have said that [the Prophet (pbuh) didn't explain those verses] had the Hadith of `Ubadah and others been an explanation. Rather, `Umar (mAbpwh) meant that the Prophet (pbuh) didn't sa anything more about riba than what was discussed in Al-`Imran, regarding the pre-Islamic riba, which was thus invalidated with the verse [2:279] "if you repent, then you shall have your principals, without increase or diminution". In this regard, it is well established that a definite noun [Al-Riba] if used repeately, would mean the same thing in the second instance as it meant in the first.

The Second fatwa

He [the Indian jurist] said: "Riba is an un-compensated increase in sales", and mentioned [in a footnote] that jurists added the restriction that the increase is stipulated as a contract condition, but that this specification by jurists is not required. He based this view on the Hadith of `Ubadah and the verse as explained by that Hadith.

I [Rida] say: This view is not necessarily accepted, since his proof is not necessarily accepted -- as mentioned above. In this regard, he has himself listed --as others have-- other more general restrictions, including within the Hanafi school, whereby riba was not restricted only to sales.

The third fatwa

He [the Indian jurist] said: "A benefit stipulated as a condition in loans is not the riba explicitly mentioned in Canonical Texts, since such explicit mention has not been proven in Qur'an or valid Hadith".

I [Rida] say: If he means that it is not explicitly mentioned in the Qur'an, we accept the statement, since the riba mentioned in Qur'an is restricted to riba al-nasi'a (increase accompanying deferment) applied to deferment of existing debts, rather than at the inception of the first contract (where increase in the latter would be compensation for benefiting from use of the loan, rather than for deferment of repayment). However, he seems to seek a more general conclusion... [Rida includes here a correction of the Indian jurist's grammar, and side-remarks about non-Arab learned scholars lacking proper independent learning of the language].Further, he claimed that there is no explicit prohibition in valid Hadith of benefit stipulated as a condition in loans is based on his maintained assuption that loans are different from debts, and are excluded from sales within which he restricted the scope of the forbidden riba. This claim is in agreement with the Hanafi juristic terminology (موافق لاصطلاح الفقه عندهم).

However, in the Arabic language, a loan is a form of debt (القرض في اللغة العربية دين). In this regard, riba fundamentally applies to all debts, whether it was established as a [deferred] price in sale, or an identified object as we shall show. It is important to note that the biggest problem in understanding the Qur'an and Sunnah independently is subjecting those Texts to later juristic terminology, rather than understanding them in the Arabic language that the recipients of those Texts would have understood.

Finally, the Hadith forbidding trading gold and silver and foodstuffs unless they are hand-to-hand and in equal amounts is not an explanation of the riba mentioned in Qur'an, nor is it a restriction of riba to sales. Rather, it is a ruling to prevent ways of effecting the riba mentioned in Qur'an (لسد الذريعة لارتكاب ربا القرآن). Otherwise, such trading by itself does not lead to such major harm as to require this extreme warning in the verses of Al-Baqarah (و إلا فهو لذاته ليس فيه من المفسدة ما يقتضي هذا الوعيد الشديد في آيات البقرة).

The fourth fatwa

He [the Indian jurist] said: A benefit stipulated as a condition at the inception of a loan [i.e. interest on loans], as it was not proven from direct Texts of the Qur'an and Hadith as riba, was inferred to be a form of riba sometimes based on analogy, and others based on the Hadith "every loan which brings a benefit is riba" (كل قرض جر منفعة فهو ربا), both of which are doubtful.

The first proof is doubtful since the analogy is invalid based on differences in instigating factor (قياس مع الفارق فلا يصح) see p.71.

The second proof is doubtful since the Hadith has a weak chain of narration, and thus is not valid, and cannot be used as proof.

Moreover, if we deem [the first proof based on] analogy to be valid, the ruling would still be doubtful [today], since rulings based on analogy change with time [reference to Majallat al-Ahkam in footnote]. In this regard, anyone who understands current times and people's dealings would alow [interest in loans], as they have allowed paying compensation for teaching Qur'an, calling for prayers, leading prayers, etc. [footnote stating that earlier rulings had forbidden such compensation]. In this regard, declaring [benefit or interest on loans] to be forbidden based on earlier rulings, we claim that those earlier rulings were only built on reasoning by analogy, without other proof. Anyone claiming otherwise must provide alternative proof, and God knows the truth best.

I [Rida] say: It appeas that this fatwa was the one for which the entire treatise was composed. Its import is that a benefit stipulated as a condition at the inception of loans is not the type of riba that was mentioned explicitly in the Qur'an or established based on a valid Hadith or valid reasoning by analogy. [The jurists argued further] that if the analogy was valid at an earlier time, its ruling may be reversed based on necessities of needs in curent times, as would be the case for any ruling based for analogy. The author of the treatise has relied on various jurists views in this regard in his footnotes. This is a juristic inference on a topic wherein jurists have differed in opinion, based on evident juristic grounds (و هو اجتهاد في مسألة اختلف فيها الفقهاء له وجه فقهي ظاهر). This is sufficient explanation of our views on this fatwa ( وحسبنا هذا بيانا لرأينا في الفتوى). As for our view on the foundational concept of riba, we shall explain it in later chaptes, and success comes from God.

I repeat that my purpose is not to appeal to authority (of Rashid Rida, the Hayderabad jurist, or anyone else). What is most interesting is the level of discourse, and the rationalism with which Rashid Rida approached the problem. In particular, the last sentence in Rashid Rida's answer to the Indian juist's third fatwa is fascinating: He concludes that the types of riba mentioned in the Hadith of the six commodities (gold, silver, wheat, barley, salt and dates; which he characterized as two monies and foodstuffs, whereas Hanafi jurists would generalize to anything measured by weight or volume) must be forbidden based on the rule of sadd al-dhara'i` (prevention of means of affecting the type of riba mentioned in the Qur'an). He reached this conclusion by noting that the harm in allowing those types of trades is not very severe, and hence would not merit such a severe warning, as is provided in Al-Baqarah ("if you do not [desist], then be warned of a war from God and his Messenger"). This is reminiscent of statements by Muhammad Abduh in Al-Manar, quoted in Sh. Dr. Tantawi's book on banking, which say that even if simple interest is a form of riba, it is not the form that ruins households, and merits a warning of war from God and his Messenger.

The undoubtful forms of forbidden riba do not include the case of one giving another his money to use it and pay him a fixed percentage. This follows since violating the jurists' rules against fixing the rate of return (high be it or low) does not constitute the type of obvious compounded riba which ruins households. The first type of transaction benefits the worker and the investor, both; whereas the forbidden riba harms one for no reason other than need, and benefits the other for no reason but greed and hardness of heart. Consequently, it is inconceivable that the two types of dealings would have the same ruling in God's justice!

I have already hinted in earlier postings (on anti-humanism and anti-rationalism) to the fact that the early 20th Century witnessed an attempted reformation of contemporary jurisprudence based on rational (dare I say economic) analysis, whereas the later discourse starting from mid-Century is heavy on rhetoric and light on substance. I repeat for the third time that the issue is not who made which ruling, but how rulings were justified by jurists a century ago and by today's jurists (of course not everyone who parades as a jurist or "scholar" in Islamic finance circles would qualify for that characterization at any rate).

5 Comments:

First: Riba al-Jahiliyyah (pre-Islamic riba), which was dropped and invalidated by the Prophet (pbuh),

Forbidden transaction during Prophets time (pre-Islam)

Imaginary Scenario:

There is a famine going on. A poor person needs money to feed his family. Goes to another person who has money asks him loan him 10 dirham. He will pay in two months time. Two months come and the poor person does not have money to pay. The lender says pay me 10 dirham now or pay me X amount in two weeks. After two weeks come he has 5 dirham and pays the lender.

1) Is this what used to happen? If not then what is the more correct scenario?

2) If so what typically would the X amount be?

3) What would the lender say next?

Through this example I wish to better understand what exactly was the Riba of the period of ignorance which is what is condemned in the Quran according to Rida.

Malik related to me that Zayd ibn Aslam said, "Riba in the Jahiliyyah was that a man would have a debt (haqq) on a man for a set term. When the term was due, he would say, 'Will you pay it off or increase me (`ataqdi aw turbi)?' If the man paid, he took it. If not, he increased him in his debt (zada hu fi haqq hi) and lengthened the term for him." (Muwatta 1180)http://www.islamicperspectives.com/Riba2.htm

This helps answer the question partially. It may still be useful to develop the example with different scenarios such as partial payment of debt etc.

Neither you nor I are jurists. I think we need to look for points of strength and weakness in jurists' arguments. Their actual conclusions are of very little relevance. I appreciate your sense of urgency to reach a conclusion, but hope to convince you that trying to reach a conclusion quickly is the surest way to reach a wrong conclusion. That is -- in part -- responsible for the many faults and false characterizations in Islamic finance today.

Allah (SWT) says "If the debtor is in a difficulty grant him time till it is easy for him to repay. But if ye remit if by way of charity that is best for you if ye only knew." Aya 280 Sura Al-Baqara

Are we ready to give unlimited time to debtor, in distress, if yes, then debt based transactions including bank loan will not harm. On my inquiry, I am told that first part in the above verse is an order from Allah (SWT) and second part is a recommendation from Him, one may practice or may not practice it.